Court dismisses UST contamination claim where previous owners plead ignorance

The Ontario Superior Court of Justice granted summary judgment to the Defendants in a property contamination claim.  The Plaintiff in the case purchased a property and then discovered significant environmental contamination that it was forced to remediate.  The Defendants said they knew nothing of the contamination. 

The property deal was completed in June, 2001.  Over two years later, in September, 2003, the Ministry of the Environment (MOE) received a drinking water complaint about wells located near the property.  It was determined that gasoline had leaked from underground storage tanks (USTs) on the property, and the Plaintiff was ordered by the MOE to remediate the property at significant cost.

The Defendants denied any knowledge that the property contained USTs, and denied the existence of any facts from which they ought reasonably to have understood there to be USTs.  They also denied the existence of any environmental contamination of the property during their period of ownership (1991 to 2001).

This was a motion for summary judgment in which the Plaintiffs had to demonstrate that there were genuine issues requiring a trial - otherwise the action would be dismissed on a summary basis without a trial.  The Plaintiff suggested that there were a number of issues requiring trial: 1) whether the property was in compliance with all laws at the time it was sold (as required by the terms of the Agreement of Purchase and Sale); 2) the state of the Defendants' knowledge about the USTs and any leaks; 3) the strict liability regime imposed by Section 99 of the Environmental Protection Act; and, 4) the effect of spoliation of evidence, given that the Defendants had destroyed business records.

The Court considered these issues and concluded: 1) there is no evidence that the property was not in compliance with environmental laws at the date of sale - there was no evidence to show that the contamination pre-dated the sale of the property (no expert report was provided); 2) there was virtually no evidence on which a finding could be made that the Defendants knew about the USTs when the property was sold; 3) Section 99 of the EPA could not be relied upon since there was evidence to show, even on a balance of probabilities, that the Defendants had ownership or control of the pollutant immediately before the first discharge (which is a prerequisite to liability under that section of the Act); and, 4) the Plaintiff failed to satisfy the Court that the business records destroyed would be of relevance to the claim.

Read the decision at: Gagnon & Associates Inc. v. Genier et. al.